The total deal is worth $1.1 billion and will help Colombo repay the money it owes Beijing.

Sri Lanka on Saturday formally handed over the control of the southern deep sea port of Hambantota to the Chinese-led companies that will run its operations, and received its first payment on the 99-year lease, the Colombo Gazette reported.

The China Merchants Port Holdings company owns 85% stake in the Hambantota International Port Group Ltd, which will now restructure the port for an estimated cost of $794 million (Rs 5,119 crore). The total deal is worth $1.1 billion (approximately Rs 6,500 crore) and will help Colombo repay the money it owes Beijing. The Sri Lanka Port Authority controls the rest of the stake in the company.

The other Chinese company involved in the port development projects is the Hambantota International Port Services.

Earlier, on Friday, the Sri Lankan Parliament overwhelmingly passed two gazette notifications that will grant tax concessions to the Chinese companies, the Sri Lankan newspaper Daily Mirror reported.

With this, Chinese news agency Xinhua reported, the Ranil Wickremesinghe government has joined China’s Belt and Road Initiative. “The Hambantota Port will add to Sri Lanka’s concept of transforming into a hub in the Indian Ocean,” it quoted the Sri Lankan prime minister as saying. The objective of the Belt and Road Initiative is to build trade and infrastructure networks that connect Asia with Europe and Africa along the ancient Silk Road routes.

Opposition to the deal

The project has faced protests from not only the Opposition parties but also from members of the government. Minister of Justice Wijaydesha Rajapakshe was sacked for opposing the deal and Arjuna Ranatunga, another minister looking after ports, was shifted for saying that the deal undermines national sovereignty.

India is worried over the strategic impact of having a Chinese-controlled port in the Indian Ocean and has voiced concerns that it may become a hub for the Chinese navy. That is why it has proposed to Colombo in the past that it would spend around $300 million to buy out Sri Lanka’s debt to China in return for a 40-year lease over Hambantota airport, which has become known as the “world’s emptiest international airport”.